When bare land is leased

Application pratique:

The 2014 French Court of Cassation ruling confirms that when you are evicted from bare land—even with buildings you funded—the eviction indemnity does not include the expense of constructing a new building elsewhere. To safeguard your business, insist on a lease clause that grants you compensation for the constructed premises if the lease is terminated early, or consider a break clause allowing you to remove the building. Always keep invoices and the signed deed to substantiate your investment, and seek legal advice before accepting any eviction offer.

Application pratique:

Under the precedent set by the Court of Cassation, the landlord is not required to compensate the tenant for the building if the lease ends naturally or the tenant leaves voluntarily, as the eviction rules for undeveloped land do not trigger building-related relocation costs. As the landlord, you should clearly state in the lease that no indemnity is due for the buildings upon any termination, and register the clause in the deed to prevent disputes. For the tenant, this highlights the risk: before signing, evaluate whether the long-term benefit outweighs the loss of your construction investment.

Application pratique:

The Court of Cassation decision makes it clear that if the landlord evicts the tenant from the bare land, any relocation indemnity will not cover the cost of constructing a new building—only the loss of the land lease is compensated. When buying such a business, you must discount the valuation to reflect that the building is not an asset you can take with you; it is effectively a wasting asset. Negotiate a lower price based on a business valuation that excludes the building value, insist on an expert appraisal, and consider whether the remaining lease term justifies the investment. If possible, request a contractual commitment from the landlord to offer a new lease or compensation for the structure.